Greencore talks on viability

GREENCORE SUGAR has started talks with beet growers and staff, with the aim of establishing whether sugar beet processing is viable in Ireland this year.

Talks with growers will indicate if a sufficient supply of beet to produce a full quota of sugar is possible.

But the company has also revealed that its ability to sell its 2006/07 sugar production at a profit is questionable.

The sugar market has become more competitive than ever, with more than 1m tonnes in intervention overhanging an EU market also facing significant over-supply in 2007, a reduction in Ireland's industrial demand for sugar, and competitors scrambling to take market share in countries like Ireland, where the native sugar industry is not expected to survive.

Nearly two months after EU Ministers reformed the EU sugar regime, Greencore Sugar is as much in the dark as growers are about the 90,000 acre crop which was one of Ireland's top paying farm enterprises up to this year.

Greencore Sugar managing director, Dr Sean Brady, said this week that clarification is urgently needed of how much the European Commission will cut the sugar quota in 2006; the company predicts the cut could be anywhere from 8% to 14%.

"This decision will be critical, particularly if the restructuring levy must be paid on the entire quota," said Dr Brady.

These uncertainties pose substantial risks for Greencore Sugar in processing a 2006 beet crop. Food industry analyst Liam Igoe of Goodbody Stockbrokers warned last week that a sugar quota cut could bring the closure of Greencore Sugar forward to 2006.

A quota cut of between 10% and 15% was forecast after last week's Agriculture Council in Brussels, where Commissioner Mariann Fischer Boel said the cut is needed to comply with last year's World Trade Organisation ruling which limits the EU to 1.273m tonnes of subsidised exports a year.

A quota cut may be needed in 2007 also, because the EU sugar reform does not kick in until July 2006, and may take a year or two to lower EU production, by forcing closure of less efficient sugar processors.

The quota cut proposal was supported last week by the agriculture ministers of Austria, Belgium, Denmark, France, Germany, the Netherlands, Sweden and the UK.

The Latvian, Finnish, Lithuanian, Hungarian and Irish delegations suggested to apply the cut only to B quota sugar used for exports and eligible for refunds.

Slovenian, Spanish and Czech delegations opposed a quota cut.

It seems certain there will be enough support to confirm the quota cut when it is put to EU farm ministers this month.